Renishaw (RSW) H2 2024 (Q&A) earnings summary

Executive summary

• Q4 margins were impacted by specific costs, but excluding impairments and restructuring, operating profit margin would have been 20%.

• Achieved 0.4% revenue growth to £691.3m, with H2 revenue 9% higher than H1 and a strong final quarter, despite challenging market conditions.

• Strategic focus on innovation, automation, and expansion into high-growth markets, with continued investment in R&D and production capacity.

• System sales margins are generally in line with the rest of the business, with additive manufacturing slightly lower.

• Progressed ESG initiatives, including a new strategy, LEED Gold certification for Brazil facility, and reduced GHG emissions per revenue.

Financial highlights

• Gross margin fell by over 400 basis points to 46.8% in FY 2024, the lowest in a decade.

• Adjusted operating profit fell 17% to £108.7m; adjusted profit before tax down 13% to £122.6m, impacted by currency and higher employee costs.

• Adjusted operating profit margin declined to 15.7% from 18.9% year-over-year.

• Adjusted EPS decreased 14% to 133.2p; statutory EPS down 17% to 133.2p.

• Cash balance increased year-on-year by GBP 11 million, partly due to a GBP 9 million joint venture deposit.

Outlook and guidance

• Expectation of gross margin improvement in FY 2025, though reaching 20% margin may be challenging.

• Expecting solid revenue growth and improved profitability in FY2025, driven by recovery in semiconductor sector and growth in metrology and additive manufacturing.

• Steady, not rapid, margin recovery is anticipated, with volume growth being critical.

• Operating profit margin targeted to improve, though inflationary pressures, especially people costs, may moderate near-term gains.

• Revenue growth is expected to be stronger in H2 than H1 due to seasonality and short order book.